The Petro is a cryptocurrency launched in early 2018 by Maduro’s government in Venezuela, considered to have been created, in part, as a means to circumvent existing US sanctions, the Club advised.

In March 2018, through Executive Order 13827, the US banned any 'US person' or person 'within the US' from dealing in any digital currency issued by Venezuela, including the Petro.

Additionally, the E.O. contains a further provision prohibiting any transaction 'that evades, or avoids, has the purpose of evading or avoiding, causes a violation of, or attempts to violate' of the primary sanction.

This further wording is not specifically limited to persons and entities falling within US jurisdiction. It is therefore possible that the secondary provision might sanction a non-US entity which causes a US entity, such as a bank processing US Dollars, to deal in the Petro currency,

...explained Danielle Datta, Claims Executive, and Ursula O'Donnell, Divisional Claims Director of the Standard Club.

By decree, the Maduro government has ordered that various 'decentralized' services and entities in Venezuela now charge for services in Petros (Decree 4096 dated 14 January 2020). This Decree extends to the Institute of Aquatic Spaces ('INEA'), which acts as the maritime authority in Venezuela.

This means that services including 'pilotage, towage, launch service, re-floating services, custody and logistic launches provided to foreign flagged vessels' may have to be paid, at least in part, in Petros.

In particular, the club understands that local shipping agents must now register for the 'PetroApp' and that, in due course, INEA intends to receive payments through this system in Petro currency.

 

Recommendations

Given the direct conflict between local Venezuelan requirements and US sanctions, operators who are unsure of their position are strongly recommended to take legal advice.

We further recommend contacting your usual club contact, who can provide up-to-date information from local sources and provide recommendations with respect to experienced sanctions lawyers, as required.​

 

The Petro is a cryptocurrency launched in early 2018 by Maduro’s government in Venezuela, considered to have been created, in part, as a means to circumvent existing US sanctions, the Club advised.

In March 2018, through Executive Order 13827, the US banned any 'US person' or person 'within the US' from dealing in any digital currency issued by Venezuela, including the Petro.

Additionally, the E.O. contains a further provision prohibiting any transaction 'that evades, or avoids, has the purpose of evading or avoiding, causes a violation of, or attempts to violate' of the primary sanction.

This further wording is not specifically limited to persons and entities falling within US jurisdiction. It is therefore possible that the secondary provision might sanction a non-US entity which causes a US entity, such as a bank processing US Dollars, to deal in the Petro currency,

...explained Danielle Datta, Claims Executive, and Ursula O'Donnell, Divisional Claims Director of the Standard Club.

By decree, the Maduro government has ordered that various 'decentralized' services and entities in Venezuela now charge for services in Petros (Decree 4096 dated 14 January 2020). This Decree extends to the Institute of Aquatic Spaces ('INEA'), which acts as the maritime authority in Venezuela.

This means that services including 'pilotage, towage, launch service, re-floating services, custody and logistic launches provided to foreign flagged vessels' may have to be paid, at least in part, in Petros.

In particular, the club understands that local shipping agents must now register for the 'PetroApp' and that, in due course, INEA intends to receive payments through this system in Petro currency.

 

Recommendations

Given the direct conflict between local Venezuelan requirements and US sanctions, operators who are unsure of their position are strongly recommended to take legal advice.

We further recommend contacting your usual club contact, who can provide up-to-date information from local sources and provide recommendations with respect to experienced sanctions lawyers, as required.​